Fixed Income

Senior Portfolio Manager John Goetz discusses the recent volatility in the municipal market and the potential implications for investors. 

Sudden changes in the municipal market over the past week occurred because of the extreme volatility in the markets since the outbreak of the coronavirus. A senior portfolio manager breaks down the one-week change in municipal yields and provides an update on the market.

Plunging bond yields and heightened stock market volatility have caused investors to worry. Our view is a further slowing of the economy is likely, but we do not yet see signs of recession.

Investment grade corporates were the worst performing major asset class in May of 2018, but now they have generated strong absolute returns of more than 10% and also outperformed both equities and other fixed income sectors on a relative basis.

Ten-year yields currently are around 2.1%, their lowest level since mid-2017, and about 115 basis points below the high of 3.25% reached last November.

This article explains common multi-asset fixed income approaches, including Core, Core Plus, Multi-Sector, and Unconstrained fixed income strategies. A non-traditional fixed income allocation can complement Core and Core Plus strategies, act as a standalone fixed income solution for those wanting to add more portfolio risk, or serve as a substitute to equity strategies.

This article discusses Fort Washington's Flexible Income Strategy, which is designed to provide investors with a high level of current income and capital protection with differentiated returns compared to traditional fixed income

Thus far in 2019, the municipal market has been one of the better performing sectors within the broader bond market, outperforming Treasuries and IG corporate bonds on a total return basis. 

Over the past year, the Fed has raised short-term rates from 1% to 2% which has had a negative effect on the entire fixed income spectrum. This has been especially true within EM.

Within investment grade corporates, intermediate corporates — defined as 5-10 year maturities — may offer the most attractive risk-adjusted return potential.

Active fixed income managers have an abundance of tools they can use to outperform their respective benchmarks, and the majority do.

Consistently predicting credit cycle turns and other macro-economic data is a challenging exercise.

Given the number of variables in the global economy, there is enormous uncertainty and biases in these forecasts and recognize them as not much more than glorified guesses.

As cash investors approached the one year anniversary of money market reform, we at Fort Washington ask, "Did you evaluate your cash management strategy?" 

As communities begin the arduous task of assessing losses and rebuilding, we can begin to sift through the numbers to get a sense of the damage and potential impact on select financial markets.